As I See It: Rethinking Retirement

As all evangelists before and since have been compelled to do, 19th century preacher Dwight Moody gave some advice to the young. “Preparation for old age should begin not later than one’s teens,” he said. “A life which is empty of purpose until 65 will not suddenly become filled on retirement.”

The start-early portion of Moody’s advice is well intended but wildly unrealistic. Teenagers have no more comprehension of life after retirement than elephants have of space travel. Besides, when life’s essentials are steadily provided for you, there’s little to suggest that someday they might cease to be. Regardless, the words “teenager” and “preparation” are seldom used in the same sentence.

The second part of Moody’s counsel is spot on, and we shall return to it shortly. But first there is that small matter of life’s essentials. And although Moody was speaking more of purpose than purses, for the moment, let’s assume it was both.

The presumption is that when we retire things will pretty much remain as they are now. But have they ever? Retirement is a dance with many partners. It can rumba with unexpected longevity, samba with poor health, waltz with ageing parents, bunny hop with struggling grown children, or stumble to the strains of economic collapse. So the question of just how much money you will need to ride out retirement in the style to which you’ve become accustomed is essentially unanswerable, unless you’ve inherited some genetic scraps from Nostradamus.

But uncertainty doesn’t stop advice givers from giving advice. The most common canard, promoted by financial planners who love to play with other people’s money, is that you’ll need to save $1 million to safely retire. That’s about as dispiriting as discovering Kanye West won the Nobel Prize for lucidity.

Ann Brenoff, who writes a column about navigating growing older, says: “A lot of what you hear in the way of retirement advice is 50 shades of wrong.” Great. Perhaps winning the lottery is not a valid retirement strategy after all.

Turns out, it’s worse than you think. Having that million dollars only works if you’re on the brink of retirement. If you’re a boomer, and judiciously manage your million, you can clear about $40K a year. But, says Brenoff, if you’re a millennial, and all you manage to scrape together is a meager million, your retirement will be spent living below the poverty line. Such are the wages of inflation. And even this discouraging outcome depends on things remaining fairly stable. History, however, tells us that every decade or so the banksters will crash the economy and your robust portfolio will magically dwindle to post-it size.

Regardless, the summons to save has fallen on empty wallets. Various studies suggest that about half of Americans have less than $1,000 in savings and no retirement investments whatsoever. Those who managed to save for retirement have, on average, less than $12,000 standing between them and ruin. The Government Accountability Office – granted, a contradiction in terms – says “almost 30 percent of households headed up by someone age 55 and older have nothing saved for retirement.” Which roughly comports with yet another study by the Schwartz Center for Economic Policy Analysis, which found that “about 40 percent of middle-class Americans will live close to, or in poverty, by the time they reach age 65.” Something to look forward to.

But if not saving, then what?

If you’re lucky enough to work for a company that still cares for its employees, you may be eligible for a pension. And if the government doesn’t do away with it, or shrink it into worthlessness, you might receive Social Security. Or maybe you’ll have rental property. Or perhaps you’ll score an inheritance. Or maybe you’ll just continue working until you start drooling on your keyboard.

But if future sources of income are uncertain, so are future expenses. Ageing parents living in a glorified closet, otherwise known as an assisted living facility, can drain all available resources faster than you can say: “What the hell happened?” Grown children can suddenly show up at your door with their laundry, their infants, and their crushing student debt. So even if you managed to save a million, you may have to share it.

All of which is why preacher Moody’s advice to start retirement preparations early remains relevant over a century later.

Ignoring Moody’s guidance means you may have to work longer than you previously anticipated – an outcome that is statistically supported. Brenoff cites data from the Bureau of Labor Statistics massaged by the Pew Research Center. “During the first half of 2017, 19 percent of 70-to-74 year-olds were still employed. That’s roughly 8 percent more than there were in the mid-1990s.”

While post-retirement-age employment may well serve as an answer for bridging financial shortfalls, it may also provide a solution for Moody’s main concern: finding purpose in retirement.

Vince Lombardi famously said: “The harder you work, the harder it is to surrender.” Many people choose to work beyond retirement not specifically to find purpose, but to preserve it. When a lifetime of purposeful work abruptly ends, and the job title that has morphed into your identity is stripped away, there may remain a horrible emptiness that cannot be filled by yoga classes. There are a great many hours to fill in a week, and unless you have something you feel passionate about to fill them, retirement will be a slow descent into uselessness. It’s no accident that the first question strangers ask each other when they meet is: “What do you do?” Answering “Nothing” is not the response of a vital human being.

Retirement brings more time and less money. It will, in all likelihood, require downsizing and refocusing lifestyle choices around things that truly matter. It is also a time to rediscover the value of community. Sooner or later, everyone needs support.

Will we have enough to see us through to the end? No one knows the answer with absolute certainty, and worry will not change that. But if worry inspires us to save and prepare, then it is not wholly wasted.

British scribe Jonathan Clements advised: “Retirement is like a long vacation in Las Vegas. The goal is to enjoy it the fullest, but not so fully that you run out of money.”

Yeah, but I prefer Samuel Johnson’s take: “It is better to live rich than to die rich.”